The VAT is subject to strict regulations. Regarding imports (trade of goods or services) from countries (or territories) outside European Union, taxation is carried out by tax administration upon their entry on the territory.
Sometimes a huge cash flow is involved, because the importer is subject to VAT calculated on the value of goods presented to customs, while the amount of VAT is totally recoverable, in order to avoid that, this operation could be carried out in a particular mode.
REVERSE CHARGE OF VAT FOR IMPORTS
This simple measure allows companies not to pay an unnecessary disbursement as far as the sum of VAT is due directly by importers to the customs authorities and then immediately recovered from tax authorities. All entities subject to VAT and based in EU paying taxes on imports in France could report, as an option, the total amount of this tax on their VAT declaration (article/section 1695, II in CGI).
In order to benefit from this option, liable person are supposed to:
- have made at least four imports within the EU territory (over the last twelve months),
- have a records management system in order to track transactions,
- provide a proof regarding an absence of serious and /or repeated breaches of the customs provisions,
- provide a proof regarding sufficient financial solvency to ensure the upcoming operations.
VAT EXEMPT IMPORTS
There exist another specific measures that permit liable persons not to subject their imports to VAT, for example, when the importation is made via France and destined to another EU country, exported goods are purely VAT exempt, or if goods are imported under Community tax exemptions. Duties and taxes due on imports are usually payable in cash while filing out customs declaration, but, on a simple request and without any specific condition, it is possible to pay this tax within a single deadline on the 25th of the month following the import operation, that permits to optimize cash flow management for some operators.
ASD Group specializes in all issues related to international tax and customs rules. ASD Group experts can conduct an audit of your situation or your projects to work together on a tailor-made solution.